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Re: BigE1960 post# 98619

Tuesday, 03/02/2021 9:59:38 AM

Tuesday, March 02, 2021 9:59:38 AM

Post# of 104411
Could they go private, of course they could. But here's a little info for other investors reading your thread and following your comments.

https://www.davispolk.com/sites/default/files/uploads/davis.polk.going.private.pdf

I'll point out these paragraphs on "Conflicts of Interest" associated with the majority owner having control to make the decision, although it applies to Delaware, there are likely similar protections in other states. Going private has it's complications.

Conflicts of Interest

An inherent conflict of interest exists in a going private transaction by a controlling stockholder because the controlling stockholder is seeking to acquire the entire target company to further its own interests while it owes fiduciary
duties to the minority stockholders, whose shares would be purchased in the proposed transaction. In addition, the controlling stockholder's ownership interest gives it the power to control the approval of the transaction (and reject any alternative transaction) and to change the composition of the company's board of directors and management if they do not act in accordance with its wishes. In general, Delaware jurisprudence has reflected concerns that the interests of minority stockholders must be protected against self-dealing
by the controlling stockholder, and skepticism regarding the motives of directors and management of the target company, who may not be independent of the controlling stockholder and may have interests in the going private transaction that are different from those of the public stockholders.

If a lawsuit challenging a going private transaction by a controlling stockholder is filed, a Delaware court will apply the stringent entire fairness standard of review (unless the transaction is structured in certain ways, as discussed below), as opposed to the deferential business judgment standard that applies to most board actions that do not raise conflict or duty of loyalty issues (see Practice Note, Fiduciary Duties of the Board of Directors: Business
Judgment Rule (www.practicallaw.com/6-382-1267)). An important strategic goal of the parties to a going private transaction with a controlling stockholder, therefore, is to avoid the burden of proving in court that the transaction
is fair to the non-controlling stockholders. This goal can be accomplished by either:

- Using procedural safeguards. Most commonly, the target company uses a special committee of independent, disinterested members of its board of directors to
negotiate the terms of the deal. In Delaware, this has the effect of shifting the burden of proof to the plaintiffs to prove that the transaction is not fair to
the non-controlling stockholders. A recent Delaware Chancery Court case suggests that it may also be possible for directors and the controlling stockholder
to obtain the benefit of business judgment review by using a special committee and requiring majority-of-the-minority stockholder approval, although this would
require overturning Delaware Supreme Court precedent in the context of a going private merger transaction (see Procedural Safeguards).

- Structuring the deal as a non-coercive tender or exchange offer with a second-step short-form merger at the same price. Historically, this would have removed the transaction from entire fairness review completely, but there is now
uncertainty as to whether additional procedural safeguards may be required to achieve this benefit (see Tender or Exchange Offer Followed by a Short-form Merger).

In determining whether to follow the negotiated merger or tender offer approach, the controlling stockholder should consider, among other things:

- Whether it would prefer to negotiate the terms of a merger transaction with a special committee of the board (after evaluating who are likely to be the members of the special committee) before announcing the transaction or negotiate the tender offer price with key stockholders of the target company after commencement of a tender offer. The controlling stockholder must recognize in each case that the dynamics of a particular transaction may result in the controlling stockholder having to negotiate with both constituencies.

- The likelihood that the tender offer will succeed in allowing the controlling stockholder to reach the 90% ownership threshold required to effect the second-step short-form merger.

- Whether board approval is required for any aspect of the transaction (such as a poison pill waiver) or to obtain regulatory approvals.

- Litigation risk management strategies.

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